LUXURY RETAIL MANAGEMENT

Michel Chevalier & Michel Gutsatz: Luxury Retail Management: How the World's Top Brands Provide Quality Product & Service Support“Part conceptual, part operational, the book is truly insightful. Each chapter prompts key questions that luxury professionals are facing, and thanks to the authors’ trusted expertise, the insights and solutions described are very
inspiring.”
– Thomas Lindemann, Group HR Director, Richemont International
“This book, for the first time, goes beyond intuitive thinking on retail and ‘lasers’ in on the rational and technical tools that make it happen. This book will become required reading for those willing to expand their expertise in luxury management.”
– Daniel Piette, Chairman of L Capital; President of LVMH Investments Funds

Private Label Beauty Brands: an Executive Briefing

Private Label Beauty Brands: an Executive Briefing for EurostafA complete Report written for Eurostaf:
The new competitive brands environment
Why are private label brands a major issue today?
What are the main trends driving the growth of private label brand?
What are the different strategies led by retailers and the different business models?
What are the key success factors of private brands?
What are the new challenges faced by national brands?

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February 28, 2016

On 4th February, Burberry announced they were deploying what appears to be a real revolution in the world of fashion (see here the announcement on Business Of Fashion): the alignment of the dates of the fashion shows and those when any new collection would be available in their boutiques.From September 2016 onwards the collections will be reduced to two each year, women's-wear and menswear shows will be merged and products will be available in boutiques at the same time. In the wake of this change, other brands announced their wish to align themselves on Burberry: Tommy Hilfiger, Tom Ford, Rebecca Minkoff, Vetements, Mulberry, etc. On 24th February, Ralph Toledano, chairman of the French Ready-to-wear Couture and Fashion Designers Federation announced that it would change nothing in their current schedule, followed very quickly by Gucci and all the Kering brands.Christopher Bailey, Managing and Creative Director of Burberry, legitimates this choice by a desire to bring the brand closer to its clients: he does not see why products should not be immediately available or why fashion should continue to distinguish between autumn/winter and spring/summer when fashion is global (and relates to both hemispheres). Ultimately, according to him, all this requires only an optimization of the supply chain: "When you break it all down, it's just a shift in your supply chain - that's the crunch". I also think that he could have cited the lower costs that such a decision implies, especially at a time when Burberry's results are lagging (in the first 6 months of 2015: Sales and earnings stable / decline in licenses 13%).But in reality, it is something else altogether: we are witnessing the great comeback of luxury and a redefinition of the conflict Italy & France v. the Anglo-Saxons."We have designers, retailers, and everybody complaining about the shows. Something's not right anymore because of social media, people are confused," said Diane Furstenberg, president of the CFDA (Council of Fashion Designers of America) announcing they were considering the eventuality of a "See Now, Buy Now" Fashion Week. It is indeed an American initiative, presented as one being made under the pressure of social media and consumers. This is a crucial point: one has only to recall, for example, that during the last fashion show Tommy Hilfiger set up an "Instapit": In addition to the space reserved for professional photographers, Tommy Hilfiger organised a space for instagrammers, to allow them to take photographs of the show under the best possible conditions and publish them live on Instagram (see here) and US shows are now often open to the public (albeit with an entrance fee). American Fashion shows are now organised as democratised "entertainment".The reactions of the luxury brands (in Paris and Milan) – which project themselves as "creation driven" – relegate the image of American brands to one of being "marketing driven": it gives them a unique opportunity to reaffirm their status as luxury brands, practicing real rarity management. And thereby to conclusively distinguish themselves from the American brands (and Burberry) often projected as affordable luxury. We are therefore seeing a general repositioning of brands within the luxury sector.But this does not imply an inflexible position on an immovable model on their part. Prada makes two models of the bags it presents in its shows available immediately in its boutiques. And Karl Lagerfeld reveals (on BoF) that Chanel's organization is far more subtle than one imagines: "Chanel makes six collections per year, but I make already one — the capsule — that is not shown to the press, to nobody. The day it comes out is the day the stores get a document. Now I want to do something else — perhaps it's too early to talk about it — to make a special collection only for the [Internet]. Fifteen things, you buy them and you get them immediately." A vision that is much more sophisticated than the "See Now, Buy Now".

January 31, 2016

Let us continue our analysis of Nike that we started last week when we looked at the birth of the brand (Nike: Birth of a brand): how a brand of sports shoes, built up from the outset as an Expert Brand (one that knows athletes best, as it said on the first shoeboxes: "Nike sports shoes are manufactured to the exact specifications of champion athletes throughout the world") became a Visionary Brand from the late 80's.

To find the answer, it is worth studying a chart: the evolutions in Nike and Reebok sales between 1980 and 1995. Why Reebok? Because Nike completely missed out in the "aerobics" movement that emerged in the US in the early 80's. Locked in their purist and rigid idea of sports and athletes, Nike executives regarded this movement as dancing, only requiring casual wear: For them, aerobics was not a sport. They were reluctant to enter the "sissy fashion" market. Reebok - a company in total disarray at the time - quickly grasped the interest of this market and capitalised on it very quickly – in particular with the launch of an elegant model (the 'Freestyle'), stylish, supple and comfortable – and white. Within the space of five years (1986) Reebok overtook Nike in the sports shoes market.

But we see that Reebok's dominance was short-lived: in 1990 Nike took over the top spot in the US market and then widened the gap. How does one explain this new domination?Of course there was the 'Air' technology, the arrival of Michael Jordan (late 1984) and the launch of Air Jordan. But stopping short at a single product, innovation or athlete was not enough. The real revolution came through advertising - but it took several years to truly achieve it.In 1983 Nike launched the first advertising campaign for a sports shoe brand on television in anticipation of the 1984 Olympic games in Los Angeles ... but without displaying a single product. The reason was simple: none of the Nike products was truly competitive. It was decided (with Chiat/Day, Apple's ad agency) to feature the athletes - Carl Lewis, John McEnroe, Mary Decker, and others.

But this initial effort was not enough: in 1984 Nike laid off 400 people, about 10% of its employees. Then 500 people again in December 1986. And the rise of Reebok continued.The real accelerator was the meeting with the Wieden & Kennedy agency in 1987. Legend has it that Phil Knight, during his first meeting with Dan Wieden, said to him: "I'm Phil Knight and I hate advertising".

We'll see next week how the work of this agency transformed Nike into a Visionary Brand – building on the values of the brand ​​and giving them a strong cultural dimension (the ad 'There is no finish line' shown above dates back to 1972 - all the values ​​of the brand are already depicted here).

November 22, 2015

Paris has a multi-sports complex at its eastern entrance that was built 30 years ago - the Palais Omnisports de Paris Bercy. It has just been renovated and the landlord, the City of Paris, has just given it a new name: AccorHotels Arena. The Accor hotel chain acquired a 10-year 'naming' right over it. I propose an analysis of this strategy: Will it be advantageous to Accor?

Let us look at it from two angles:

The coherence between the site and the brand - if the sponsor's sector is directly related to that of the site (in this case, sports), the brand will come out a winner. Many insurance companies (for example, Allianz in Nice and Munich, MMA in Le Mans) have invested the sports domain - believing that there is a direct link between practicing a sport and sports insurance. Will not the first reaction of those visiting the Arena be, 'Oh, here's a new hotel!' What relationship is there between sports and the hotel industry?

The public's practice of giving their own diminutives to such buildings – in other words, the name by which they are familiarly known. Since 1984 this complex has had two different names:

Its 'administrative' name, POPB, which is the acronym of its official name;

The name it is commonly known by: most people call it simply 'Bercy'.

We see in this a two-step move towards simplification: On the one hand, from the Palais Omnisports de Paris Bercy (much too long) to POPB (unpronounceable), and on the other, to 'Bercy'. The public thus gave it a short and simple moniker that also indicates its geographical location. What will be the diminutive of Accor Hotels Arena? The answer is clear – either 'Arena' or 'Bercy'. In all evidence 'Accor Hotels' will simply fall by the wayside and people will pick the simplest name.

What can we conclude from this? In both cases, the name is ambiguous (is it a hotel? What name should one retain?), compounded by the large logo where the hotel's name takes precedence over the name of the site (Arena). Could there have been another choice? Yes, of course: it would have been much more elegant and effective to call it ARENA by ACCORHOTELS.

November 15, 2015

Hyundai has just announced the creation of a luxury brand, Genesis - whose first two models had until now been marketed under the Hyundai brand: Genesis and Equus. Hyundai here is merely following the business model introduced long ago by Toyota (with Lexus) and Nissan (with Infiniti) and more recently by Citroen (with DS). Japanese brands realised long ago that it is impossible to develop a medium-end brand into a premium or luxury brand: Consumers have a definite concept of car brands and they clearly distinguish the mass market from the premium. This latter segment has been defined and invested by German brands (Mercedes, BMW and Audi) - and it is practically impossible to access it from the lower rungs. Renault lost a lot of money in a vain attempt to develop its brand into high-end sedans (remember the Avantime and the Vel Satis).

However the Hyundai approach is far from being as clear as it claims! "Hyundai did such a good job in executing its Genesis sports sedan and Equus luxury model and subsequent treatment of their owners that the brand had no choice but to spin off its own premium brand", says Michael O'Brien, VP of Corporate and product planning Hyundai America. But this is merely an idealized rewriting a posteriori of the real story.

Hyundai has always been positioned as an entry-level brand. Much work had been done on the design of the cars since 2007 (introduction of the concept of 'fluidic sculpture'), which enabled the brand to position itself at the entry-level end of the medium-end segment with models like Elantra (from $ 14,000 in the US market in 2010) and Sonata (from $ 19,000). Its new design had given the brand an undeniable appeal to Generation Y – in particular when compared to American brands. The consequence was that the brand outperformed the US market by an average of 10% until 2011. Since 2012 however the trend has clearly reversed, Hyundai underperforming in the US market by about 5%. What is this due to?

In 2008 the US subsidiary brought out a strategic document according to which there was a "perception gap" between perceived quality and the actual quality of the brand - and that its perceived low quality "stigmatized" it. It deduced from this that Hyundai had to reposition itself and move up to the luxury segment - and decided to launch two new Genesis models (prices starting at $ 38,000) and Equus (prices starting at $ 58,000). The brand – with a good mid-range image – was torn between the $ 14,000 models and the models over $ 60,000! Consumers no longer understand the brand and move away.

The decision to create a new premium brand is the consequence of this major strategic mistake: One cannot manoeuvre such a move to the upmarket segment except by losing one's customers. Hyundai was thus obliged to create Genesis and market the two models in question under this brand name. Hopefully this wise decision will be positive and that the two brands will be able to develop, each within its own segment.

November 08, 2015

One of the key chapters of my new book 'Brand Dynamics' (written with Jane Wang, a professor at CEIBS, which will be published by Palgrave McMillan end 2016) relates to the construction of a brand over time. All brands aspire to become a Visionary Brand - conveying a 'vision of the world'. We show that this is, in reality, the result of a long process - and we illustrate it with the Dove example.

Dove was launched in 1955 by Lever Brothers, with a single product: a soap. 25% of the formula of the soap consisted of a new ingredient - stearic acid – in other words, a cleansing cream. Dove was launched as a 'beauty bar' that moisturises the skin ("creams the skin") and not as a soap ("does not dry like soap").

Dove was thus unmistakably launched as a Performance Brand ("Creams your Skin" - which changed over time to "moisturises"). In the first film the miracle ingredient is strongly highlighted: the brand is as much an Ingredient Brand.

For 20 years the same message was repeated, but a major innovation took place in the 70s: the brand asked clients to relate their experiences to promote the benefits of its 'Beauty Bar'.

These testimonials grew - and gradually incorporated the idea that using the products of the brand that make them more beautiful enhances femininity and self-esteem.

The brand thus acquired a core element of its identity: the proximity to real women. Thus when Dove launched its "Campaign for Real Beauty" in 2004 it stayed true to its values. It merely recognised that the representation of female beauty had evolved: a social norm of beauty had been established. Dove therefore chose to draw on its values ​​(we help real women to build their self-esteem) to put forward the idea that every woman can be beautiful (without seeking to conform at all costs to this social standard).

The 'Sketches' Campaign (2013) is therefore consistent with the brand's values, its history AND showcasing of a contemporary vision of beauty. The Dove storytelling is now that of a true vision of the world: the brand's mission is to help each woman build her self-esteem.

Dove thus evolved over the last 50 years from an Ingredient Brand + Performance Brand to a Visionary Brand.

October 18, 2015

Both on BrandWatch and in my MBA and Executive MBA courses, I keep repeating that a brand in this 21st century cannot build itself unless it places the consumer at the centre of its strategy. By this I mean that a brand must, above all, think like the customer ("put yourself in your customers' shoes!").

The brand concept would also apply to a territory: the brand FRANCE is a brand just as is the brand GREAT BRITAIN, brand PARIS or the brand LONDON. So, if they wish to construct a brand, each of these territories has to walk a mile in their clients' shoes. But do they really? For brand FRANCE and brand PARIS the answer is an emphatic "NO!" when one compares them to brands LONDON and GREAT BRITAIN.On a recent trip to London, in August, I experienced first hand how far ahead GREAT BRITAIN / LONDON are of France / Paris where service is concerned. Here are three significant examples - showing that to be customer-oriented one has to first think like the customer and attune the steps of the process to those of the customer.

Case 1: The customer wishes to enter the country without having to stand in a long queueLONDON / GB: When I reached Stansted I saw signboards as I stepped out of the plane informing all travellers from the European Union, Switzerland, Iceland, Norway and Liechtenstein who possess biometric passports that they could use the 'ePassport Gates' for passport verification and exit. The procedure is quick and simple and allows you to enter the country within minutes: the passport is scanned and the gate opens automatically. There are 15 gates in Stansted.

FRANCE / PARIS: There is also a similar system at French airports called PARAFE, but it is reserved exclusively for French biometric passport holders. Besides, there is generally only one, or at the most two, Parafe entrance gates. Enough said.

Case 2: The customer wishes to pay for his taxi with his credit cardLONDON: I take a typical black English taxi in which I find (similar to those in the yellow New York cabs) a card-payment device in front of me, behind the driver, with a sign saying all credit cards are accepted (including American Express).

PARIS: Other than the G7 taxis that generally accept credit cards, most other Parisian taxis refuse payment with a credit card (and, out of decency, I shall not repeat here the drivers' comments regarding the American Express card!).

Case 3: the customer wishes to find a parking space (and also pay for it)LONDON: Several signboards put up on public roads tell the driver that he can download the free app, ParkRight, that shows him all the parking places that are available in the area: private and public car parks, residential parking lots AND even in the street! In fact 3,000 sensors have been installed across the city to show in real time where parking space is available in the area. It goes without saying that the customer can also pay for his parking using the app.

March 22, 2015

Moving forward in my analysis of Brand Dynamics and in building a Typology of Brands, I introduce today my second Brand Type: Performance Brands. We will next analyze Expertise Brands (4/7), Identity Brands (5/7) and Visionary Brands (6/7). A last post will introduce Brand Dynamics (7/7), showing how a brand can move from one type to another during its lifecycle.

WHAT IS YOUR BRAND TYPE?

WHAT IS YOUR BRAND'S DYNAMICS?

LET US START A CONVERSATION SO AS TO BUILD COLLECTIVELY THIS OPERATIONAL ANALYSIS OF BRANDS!

Our second Brand Type is found in categories where functional performance is a major expectation of the Category. Take for instance the homecare category or the baby care category. In both cases the consumer (mostly a housewife or a mother) will expect the product she has bought to be efficient: she wants her house or her clothes to be clean – as she wants her baby’s diapers to maintain her child’s hygiene. We find such brands in BtoC ‘care’ categories like household care, personal care, feminine hygiene, baby care and in most BtoB categories (think of Intel or Gore Tex).

We will therefore define a Performance Brand as a brand that offers consumers the best solutions to an identified need – mostly a very functional expectation. Performance Brands will therefore need to reassure the consumer on the performance of their products.

Some Performance Brands

Pampers: the brand story is that of infant comfort. The brand has been bringing to market a flow of innovative products – all targeting baby protection: they introduced age diapers, wetness indicators, and protective lotions. Pampers has been targeting mothers’ trust – with the health of the baby as its primary objective.Mr. Clean: the P&G brand focuses on the battle against dirt – and its master word is power. Dove: originally (before 2000) the Unilever brand stood for “hydration”. Presenting itself as pH neutral and with a high content of moisturizing cream, its main message was on “creaming the skin without efforts”.Gore-Tex: this successful BtoB brand has built itself on both the use of technical fabrics (Gore-Tex® Fabric) and of a specific technology (Gore-Tex® Technology) guaranteeing that these fabrics are waterproof, windproof and durable. It therefore is both an Ingredient Brand and a Performance Brand.

How do Performance Brands communicate?

All Performance Brands showcase power and service. In fact their major message being on performance, they will highlight their functional results (hydration, cleanliness, protection against smell, etc…). Nevertheless they all have a tendency to try and bring an emotional dimension to this very performance-oriented message. Some will be quite successful in doing this (Dove as we will see in a later post), others less as we can see below.

Pampers gives us very clear depiction of the technicity (and therefore performance) of their products: we are in baby cleanliness. Their packaging similarly only depicts functional benefits.

Although most of their movie ads will take the same direction (“Baby Dry 3 am”),

some – as the one aired for the 2015 Super Bowl - will take a very different direction: mother love and care. Pampers tries to move to a more emotional brand – becoming an identity Brand (as we will see in a forthcoming post).

Dove for years has always been showing the benefits of its moisturizing cream – “up to ¼ of moisturizing cream” – and of its benefits for the skin. We will see how it has now moved to a Visionary Brand – with its social fight for “Real Beauty”.

Mr Clean has been focusing since its inception (in 1959) on power, using its persona as the ideal servant that will clean the house for you (the myth of the genie in the lamp is where it finds its origin).

BtoB brands are mostly Performance Brands – as ESP; Gore-Tex; Intel..

Major points to remember

A Performance Brand offers consumers the best solutions to an identified need – mostly a very functional expectation.

All Performance Brands showcase power and service. In fact their major message being on performance, they will highlight their functional results (hydration, cleanliness, protection against smell, etc…). Nevertheless they all have a tendency to try and bring an emotional dimension to this very performance-oriented message.

March 08, 2015

Coca-Cola has announced a major change in its marketing strategy: it is abandoning a 4-brand approach (Coca-Cola / Coca-Cola Zero / Coca-Cola Life / Diet Coke) for a single brand strategy (Coca-Cola) for marketing the four products. This new strategy launched in Britain and Spain will gradually include 11 countries, among them the USA.The arguments used by the company to justify this change are symptomatic of failure: they claim that consumers have a hard time identifying the characteristics that differentiate the brands (e.g., 50% are unaware that Coca-Cola Zero contains no sugar or calories). We must therefore conclude that the significant marketing budgets allocated separately to the 4 'brands' do not help consumers to understand the differences between them! The company has therefore decided to streamline its brand portfolio to render its marketing outlays more efficient.However, it is important to look beyond press releases and understand the market situation and the trend in Coca-Cola sales. The market for soft drinks is clearly in decline; consumers are becoming aware of the health risks of these drinks.

Coca-Cola has set itself a target: its products with lower sugar content and calories will represent 50% of its sales by 2020. But that's still a long way off! In the USA the Coca-Cola brand still represents almost 60% of sales, Diet Coke 32% and Coca-Cola Zero 18%. And the trend is very unfavourable to Diet Coke - global sales fell sharply:

In Britain the brand images of Diet Coke and Coca-Cola Zero are very weak:

So we see that, in a context where consumers are looking more and more for products that are good for health, the separate-brand strategy followed since the launch of Diet Coke in 1982 and Coca-Cola Zero in 2005 failed to really position Diet Coke, Coke Zero and (since 2014) Coca-Cola Life, in the marketplace. Consumers still do not understand the differences between them. Meaning that it has been a failure.

From a conceptual point of view this 4-brand approach in my opinion has been a fundamental mistake from the outset, since each one is implemented separately and does not bring value to the Coca-Cola brand itself. Here we touch upon one of the deviances in the marketing of American brands that favours an architecture Masterbrand / Sub-brands, while a European approach would be Masterbrand / Product line.

There should be only one Coca-Cola story - each product being at the service of the story and answering a different consumer expectation.

Now it remains to be proven that Coca-Cola's new approach will help to position the 4 products more successfully: the change of packaging, displaying the Coca-Cola name horizontally, colour codes, or the fact of now having to present the 4 products together - will they be sufficient to increase the sales of the 4 products? Do the last three really correspond to clearly identified consumer expectations?

February 22, 2015

Moving forward in my analysis of Brand Dynamics and in building a Typology of Brands, I introduce today my first Brand Type: Ingredient Brands. We will next analyze Craft Brands (3/7), Performance Brands (4/7), Identity Brands (5/7) and Visionary Brands (6/7). A last post will introduce Brand Dynamics (7/7), showing how a brand can move from one type to another during its lifecycle.

WHAT IS YOUR BRAND TYPE?

WHAT IS YOUR BRAND'S DYNAMICS?

LET US START A CONVERSATION SO AS TO BUILD COLLECTIVELY THIS OPERATIONAL ANALYSIS OF BRANDS!

Our first Brand Type is found in categories where ingredients or materials are both important and carry a positive image.Why are ingredients or materials important for that category? For a very simple reason: because some of their values are critical for the category itself. Take for instance the skincare category. Thermal water - the founding ingredient both of the L’Oréal brand Biotherm and of Laboratoire Pierre Fabre’s brand Avène - is endowed with strong positive values when it comes to health. In Europe it has long been associated with health resorts where doctors send people to cure their ailments (each thermal water having specific health benefits). Thermal water also benefits from the positive image of water, thus being associated with hydration. As a consequence products that use thermal water will be seen as both good for health and having strong hydrating benefits. These ingredients therefore vindicate, endorse and legitimize the quality of the product manufactured by the brand.Such ingredients or materials are to be found mostly in beauty, food and health categories. But as we will see they can also be found in apparel, jewelry or in BtoB categories. We will therefore define an Ingredient Brand as a brand that masters, in all its forms, an ingredient, a material or a product that is critical to the brand’s expertise.

Some Ingredient Brands

Perrier: the brand story is that of taming the strong naturally sparkling water of the Perrier source (where most other sparkling waters just add gas to still water)

Caudalie: the French beauty brand masters a unique ingredient, grape extracts – that have strong anti-ageing properties. Created by the Cathiard family that owns the renowned Chateau Smith Haut Lafitte near Bordeaux, Caudalie benefits highly from the very positive image that Bordeaux wines have.

Swarovski: the brand “owns” crystal. They present themselves as the “world’s leading producer of precision-cut crystal for fashion, jewelry and more recently lighting, architecture and interiors”. Their collector club is called the Swarovski Crystal Society. The brand benefits of course from the very positive image of crystal – a make believe (cheap) diamond in a sense.

Eric Bompard: this French cashmere brand signs “Irresistible cashmere”. It only refers to the product itself (like many other cashmere brands – take the Chinese brand Erdos for instance). Its website does not say a word about the brand, it just speaks of cashmere products. References to the history of the brand are hidden in the “Blog” section amidst further posts on cashmere (How to protect it / Knitting lessons / the Spring Catalogue / Introducing a new store..).

De Beers: of course the new brand signature is now “De Beers Jewellery”, but a few years ago (it was founded in 2001) it was “A Diamond is Forever”. The name of the brand refers to the diamond mining company and the brand’s timeline goes back to 1888 date of the company’s incorporation. De Beers jewelry of course benefits from the immense reputation of the diamond mining company – and it still has to move away from being an Ingredient Brand.

Gore-Tex: this successful BtoB brand has built itself on both the use of technical fabrics (Gore-Tex® Fabric) and of a specific technology (Gore-Tex® Technology) guaranteeing that these fabrics are waterproof, windproof and durable. As we will see in one of our next Brand Types, Gore-Tex is also a Performance Brand (as many BtoB brands).

How do Ingredient Brands communicate?

All Ingredient Brands showcase their founding element (the ingredient or the material). They will build all their communication on the ingredient itself, using its positive imagery to build the brand itself. Therefore most of them will use depictions of the ingredient (and/or material):

The first De Beers logo included the sparkle of a diamond

The Swarowski logo includes crystals in its signature swan:

Eric Bompard has been using an advertising signature (till 2014) that said “ A Bompard Cashmere is a Goat who Really Succeeded”! And they always showed goats.

Caudalie represents grapes on its packaging

Perrier depicts its bubbles and shows the strength of the pressure in the water

Major points to remember

An Ingredient Brand masters, in all its forms, an ingredient, a material or a product that is critical to the brand’s expertise.

This ingredient (and/or material) has strong positive values that relate to the main category of the brand itself. There are strong links between the brand and its founding category – and consistency must be achieved permanently between the brand values and the category values.

Ingredient Brands showcase their founding element, the ingredient or material in all their communication (advertising, packaging, signature…).

January 11, 2015

In March 2014 I published a post in BrandWatch entitled "How to Reinvent Gucci (1): The current situation". The facts were clear: Kering's flagship brand is stalling. More than that, it seems to become more commonplace and risks losing its aura as a luxury brand (proliferation of entry-level products, opening of too many stores, etc.). Arriving on the scene in 2008, Patrizio di Marco had tried to reposition the brand from 2010 – by increasing average sales prices by 41% and reducing the ratio of "logo" products, which went from 85% to less than 50%. But this was not enough to reverse the downslide. The penalty was paid in December 2014: Patrizio di Marco (CEO) and Frida Giannini (Creative Director) are leaving the brand – the first on 1st January, and the second at the end of February after the presentation of the Autumn-Winter 2015-2016 women's collection (in fact she left earlier). Why this double exit?I would like to pinpoint two fundamental problems of the Gucci brand - which probably weighed heavily in the balance while taking this decision:

The digression from the notion of Creative Director: We too easily forget that Tom Ford – who was Gucci's Creative Director from 1994 to 2004 - "invented" the role of Creative Director. In doing so, he propelled modern luxury brands originating in fashion & accessories towards modernity: a single individual became responsible for the overall creative dimension of a brand. The person who handled everything related to brand identity succeeded the designer/stylist: style, communication, store concepts, events, etc. Tom Ford was the first ambassador of the brand - during fashion shows, but even more so at international social events. The Creative Director is in a way the "guardian of the temple" of the brand. Frida Giannini who succeeded Tom Ford in 2006 (after Alessandra Fachinetti's short interlude) never succeeded in giving the brand a strong image - neither in stylistic coherence, nor by capitalizing on the "sexy quotient" with Tom Ford had endowed the brand with. As Nicole Phelps remarks on style.com "from a fashion perspective, the problem with Giannini’s style, if there was one, was the unpredictability of her collections - 1920s Art Deco one season, followed by Arthur Rimbaud-influenced decadence the next, and after that Marella Agnelli’s 1960s chic. Though less radical, Giannini belongs to the Marc Jacobs school of design, one in which newness counts for more than consistency". In the same way, Gucci shops were "frozen" in a concept dating back to a time when the importance of customer experience was fundamental and in which the concept of the boutique was a major factor. Loss of creativity, legitimate questions about the identity of the brand: we have here all the ingredients for a weakening of the Creation Department.

A symbolic error of the "duo" CEO/Creative Director: Gilles Auguste and myself, in our recent book "Luxury Talent Management" (Palgrave Macmillan, 2013) show that over the last 20 years, at the heart of luxury brand successes we find "duos", a Creative Director and a CEO (Domenico & Tom Ford at Gucci; Patrizio Bertelli & Miuccia Prada at Prada; Stanislas de Quercize & Nicolas Bos at Van Cleef & Arpels, and so on.). These duos ensure the consistent development of the brand both in its creative and business dimension. In 2011, Patrizio di Marco and Frida Giannini had officialised their relationship: so, we had a "real" couple at the head of Gucci – much like Prada. But there is a major difference between Gucci and Prada: di Marco and Giannini are employees of the company, while Bertelli and Prada are owners. We should not lose sight of the fact that brands and luxury groups are family companies (Kering, Richemont and LVMH, and also of course the Pinault, Rupert and Arnault families). Salaried executives should never forget this: they have to comply with the rules laid down by family companies – and above all, not perturb symbols that may cause owners to believe that they think of themselves as anything other than employees.